Is severance pay in the event of a layoff subject to personal income tax and insurance contributions or not?

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We answer questions in accordance with the law.

Is there income tax?
In accordance with Article 178 of the Labor Code of the Russian Federation, when an employee is laid off, severance pay is not subject to personal income tax in the following cases:

the organization in which the dismissed employee worked undergoes liquidation procedures;

the dismissal occurred due to a reduction in the number or staff of employees;

the employee is dismissed namibia email list due to refusal to transfer to another job due to illness or due to the company moving to another locality;

a person is unexpectedly called up to serve in the Russian army;

an employee who has been unlawfully dismissed is reinstated in the same position;

complete loss of ability to work by an employee who had previously performed his duties in good faith;

refusal of an employee for various reasons to comply with new requirements of the employment contract when they arise;

dismissal of an employee holding a management position at the request of the owner of the enterprise.

The employer is legally allowed to specify in any type of contract special conditions according to which it will be possible to make payments of benefits and increase the amount of payments.

In the absence of additional instructions in the contract, the severance pay of a laid-off employee will be subject to personal income tax on a general basis.

Are there any insurance premiums?
Severance pay for redundancies is taxable like other types of compensation. The exception to this rule is compensation for unused vacation. However, insurance premiums are deductible only if the amount of the payment exceeds a certain limit.

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The withheld funds are transferred:

to the Social Insurance Fund of the Russian Federation . This is an off-budget organization whose task is to implement the compulsory insurance program for the population of Russia;

to the Federal Fund for Compulsory Medical Insurance . The purpose of this state organization is to protect the health and social protection of citizens of the Russian Federation. This fund is extra-budgetary. It provides the country's population with free medical care within the framework established by law;

to the Pension Fund of the Russian Federation . This is the largest state organization, called upon to form and distribute financial resources to provide pensions to citizens of the country, as well as to provide the population with the necessary social support measures.

What payments are due to an employee upon dismissal?
Laid-off employees must receive:

1. Standard accruals that are transferred to the account on the last working day:

salary for the period of time worked, as well as any additional payments, bonuses and other payments due;

compensation for unused vacation days;

severance pay, the amount of which is not less than the average monthly salary for one month, unless a different amount of this payment is specified in the employment or collective agreement;

additional compensation paid in case of dismissal before the time specified in the notice of reduction. The amount of this compensation is equal to the average salary for the given period. Thus, the employer can dismiss the employee only with the latter's consent.